U.S.-China relations have never been easy. No problem in the world can be solved without the pair working together, but working together is hard. The relationship is set for more uncertainty with the election of Donald Trump.
On Dec. 2, Trump took a call from the democratically elected president of Taiwan, breaking decades of precedent. The call raised fears that he would take a hard line on China. But then Trump announced Iowa Gov. Terry Branstad as ambassador to Beijing. Branstad reportedly has a close personal relationship with Chinese President Xi Jinping. A little good cop, bad cop, perhaps? Anyway, a whole mythology has emerged about the most consequential relationship in the world. Here are myths that could use busting:
▪ Trade and engagement will set China free.
This idea has been a foundational myth of America’s engagement with China almost since President Richard Nixon went there in 1972; it’s been used to justify decades of interaction. So far, this epochal bet has been a bust. China’s economy has become more open, and personal freedom for average citizens has expanded. But China’s one-party state represses dissent even more severely than it did 30 years ago in the run-up to the 1989 crackdown on pro-democracy protests around Tiananmen Square. A slew of Communist Party documents indicates that the level of paranoia about American values encroaching on China is at a crescendo. Meanwhile, Western businesses remain banned from investing in a wide swath of China’s economy.
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▪ Trump’s Taiwan call threatened the status quo.
The “status quo” between Taiwan and the United States has been evolving for decades. In exchange for Chinese promises to help ease the United States out of Vietnam and counter the Soviet Union, officials from the Nixon and Carter administrations promised China that America would walk away from Taiwan, allowing China to absorb the island of 23 million people, which Beijing views as a renegade province.
Since then, however, successive administrations have worked to better ties with Taiwan. Weapons sales to the island remain robust despite a promise to China in 1982 to slow them. Diplomatic contact has been upgraded. Washington now supports granting Taiwan observer status at a variety of international organizations. Most Taiwanese can come to the United States without a visa. In that sense, Trump’s call was a logical continuation of a slowly evolving process of improved relations. The big concern, however, is that China will use the call as an excuse to further bully Taiwan and that Trump will stand by.
▪ The United States has tried to contain China’s rise.
Any clearheaded look at the history between the two countries reveals that throughout their interaction, save for a short interregnum during the Cold War, the United States has been, if anything, the prime foreign enabler of China’s rise. America’s open wallets, open society and open universities have been key factors in China’s ascent from a Third World backwater to a global economic power. In 2001, the United States ushered China into the World Trade Organization, contributing to a massive boom in Chinese exports. American-trained scientists man Chinese research institutions, and American-trained technocrats populate its central bank.
Of course, the Chinese Communist Party cannot publicly recognize this. But privately, every party leader since Deng Xiaoping has sent his child to be educated in the United States — an acknowledgment that America holds some of the answers to China’s quest to become strong and rich.
▪ China is killing the U.S. economy.
The notion that China is destined to take over the world was a major theme of this election. “We can’t continue to allow China to rape our country,” Trump told a crowd in May, claiming that the country is “killing” the United States on trade and dominating us on the international market. Trump and many, many others have also argued that China’s holding of about $1 trillion in U.S. debt gives it leverage over everything we do.
None of this is really true. First, the U.S. Treasurys market is enormous, totaling about $11 trillion, and highly liquid. China holds about as much in Treasury bonds as Japan does. And if China dumped its holdings, it would hurt China as much as the United States, because a price drop in Treasurys would lower the value of China’s investments.
On trade, years of studies have shown that automation is more of a factor than outsourcing to China in the hollowing-out of U.S. manufacturing jobs. That said, certain sectors of the economy, such as furniture-making and textiles, have been hammered by China. Americans tend to overestimate our problems and underestimate those of our competitors. China is facing a series of looming predicaments: Its corporate debt to GDP ratio is one of the highest in the world. Its environmental issues are so extreme that some cities have stopped publishing life expectancy statistics. And finally, China’s demographics, born of its former one-child policy, are resulting in a rapidly aging population and higher labor costs.
John Pomfret, a former Washington Post bureau chief in Beijing, is the author of “The Beautiful Country and the Middle Kingdom: America and China, 1776 to the Present.”